Government urged to tackle PPI claims firmsWhich? writes to Secretary of State for Justice

15 May 2012

CMC PPI claims

There is no need to use CMCs, which will take a cut of your money

Which? has written to the government, urging it to clear up the claims process for people who were mis-sold payment protection insurance (PPI) and stop claims management companies (CMCs) cashing in at their expense.

In a letter addressed to the Secretary of State for Justice Kenneth Clarke and co-authored by and the British Bankers' Association, Which? called on the government to ensure that third party complaint handlers are properly regulated and bad practice surrounding PPI claims is stamped out.

Following a PPI summit involving senior representatives of, Which?, financial services providers and the Financial Services Ombudsman, it was decided that urgent action was needed to improve confidence in the PPI complaints system.

Government has 'critical role' in PPI claims

Banks and other institutions have set aside around £9bn to compensate consumers who were mis-sold PPI but Which? believes that the government has a critical role to play in stopping exploitative claims management companies (CMCs).

Recent research from and Which? found that a quarter of people didn't know that CMCs take a fee, while only half knew that using a CMC would be no more successful than making the claim themselves.

You do not need to use a CMC to make a complaint about PPI and you can make a complaint yourself, for free. Consultations are also taking place with banks to make sure they simplify the process of making a claim.

CMCs giving misleading advice

The letter explained that there has been significant evidence of rule breaking among CMCs, with misleading advice, unfair contract terms and a lack of fee transparency all common practice and at the expense of consumers.

The letter states: 'It is likely that the bulk of the money being set aside for PPI redress will be distributed over the next year, so it is essential that urgent action is taken to encourage better supervision, self-regulation, tighter regulation and enforcement action against CMCs by the Ministry of Justice.

'Any delay in bringing forward much needed changes to help drive out the poor practice of some CMCs will only lead to further consumer detriment and additional costs across industry and the Financial Ombudsman Service.'

More on this…

  • Make a PPI complaint - using our free and simple tool
  • Claims management companies - what to look out for
  • The Which? PPI campaign - how we're helping you get compensation